NPS and APY - Securing the golden years

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  NPS and APY - Securing the golden years

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• The story: In May, the Pension Fund Regulatory and Development Authority (PFRDA) announced that Assets Under Management (AUM) under the National Pension System (NPS) and Atal Pension Yojana (APY), crossed the milestone of Rs. 6 trillion. AUM is the total market value of the investments that a person or entity handles on behalf of investors. (1 trillion = 1 lakh crore)
• Points to note: 

1. National Pension System (NPS) - The Central Government introduced the National Pension System (NPS) with effect from January 2004 (except for armed forces). In 2018, to streamline the NPS and make it more attractive, the Union Cabinet approved changes in the scheme to benefit central government employees covered under NPS. It is being implemented and regulated by PFRDA in the country. The National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS. The NPS is structured into two tiers - (i) Tier-I account - This is the non-withdrawable permanent retirement account into which the accumulations are deposited and invested as per the option of the subscriber, and (ii) Tier-II account - This is a voluntary withdrawable account which is allowed only when there is an active Tier I account in the name of the subscriber. The withdrawals are permitted from this account as per the needs of the subscriber as and when claimed. As for beneficiaries, the NPS was made available to all Citizens of India from May 2009. Any individual citizen of India (both resident and Non-resident) in the age group of 18-65 years can join NPS. But OCI (Overseas Citizens of India) and PIO (Person of Indian Origin) card holders and Hindu Undivided Family (HUFs) are not eligible for opening of NPS accounts.
2. Atal Pension Yojana (APY) - The scheme was launched in May, 2015, with the objective of creating a universal social security system for all Indians, especially the poor, the under-privileged and the workers in the unorganised sector. It has been implemented comprehensively across the country covering all states and Union Territories with male to female subscription ratio of 57:43. But only 5% of the eligible population has been covered under APY till date. It is administered by the PFRDA through NPS. Any citizen of India can join the APY scheme. The age of the subscriber should be between 18-40 years. The contribution levels would vary and would be low if a subscriber joins early and increases if she joins late. Benefits include a minimum guaranteed pension ranging from Rs 1000 to Rs 5000 on attaining 60 years of age. The amount of pension is guaranteed for lifetime to the spouse on death of the subscriber, and in the event of death of both, it is paid to the nominee.

• PFRDA: The Pension Fund Regulatory and Development Authority is the statutory Authority established by an enactment of the Parliament, to regulate, promote and ensure orderly growth of the National Pension System (NPS). It works under the Department of Financial Services under the Ministry of Finance. Its key role is appointing various intermediate agencies like Pension Fund Managers, Central Record Keeping Agency (CRA) etc., and to develop, promote and regulate the pension industry under the NPS and also administers the APY. 

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